Corporate Governance

The Swissquote Group is fully committed to meeting the highest standards of corporate governance and acts in compliance with the standards established by the "SIX Swiss Exchange Directive on Information Relating to Corporate Governance".

Themes Trading

Your portal to the markets

The Swissquote Bank financial platform sees more traffic than anything comparable in Switzerland and is secure and user-friendly. The research and analysis tools and real-time information it provides give you everything you need to invest in the financial markets.

eTrading Demo Platform

A platform for every type of client

Whether it be for private clients, asset managers, or companies, Swissquote Bank provides a secure, high-performance and user-friendly financial platform. Everyone can be active in the markets in complete confidence and manage their online portfolio efficiently.

Stay on top of the markets with our daily analysis.

Robo-Advisory

We develop robots to make our work easier, deliver precise results, increase our performance and, of course, to save time. We have created the Robo-Advisor to help you realise all these goals in your personal asset management activities.

Lombard Loan

With a Lombard loan, you can seize market opportunities at the right moment, reorient or optimize your security portfolio without needing to inject new liquidity. Thanks to attractive conditions and interest rates, Lombard loans are a particularly advantageous financing solution.

Disclaimer

Our systems have detected that you are using a computer with an IP address located in the USA.
If you are currently not located in the USA, please click “Continue” in order to access our Website.

Local restrictions - provision of cross-border services

Swissquote Bank Ltd (“Swissquote”) is a bank licensed in Switzerland under the supervision of the Swiss Financial Market Supervisory Authority (FINMA). Swissquote is not authorized as a bank or broker by any US authority (such as the CFTC or SEC) neither is it authorized to disseminate offering and solicitation materials for offshore sales of securities and investment services, to make financial promotion or conduct investment or banking activity in the USA whatsoever.

This website may however contain information about services and products that may be considered by US authorities as an invitation or inducement to engage in investment activity having an effect in the USA.

By clicking “Continue”, you confirm that you have read and understood this legal information and that you access the website on your own initiative and without any solicitation from Swissquote.

A forced march towards electric

Manufacturers no longer have a choice: if they want to comply with European and Asian standards, they must now market (and sell) electric vehicles. This is an incredible challenge for an industry forced to go green very quickly.

The star of the Frankfurt motor show, which opens on 12 September, should have been the Golf 8, the seventh iteration of a success story which began in 1974. But the iconic compact car from the German company was pulled from the red carpet in order to not steal the spotlight from a newcomer — the Volkswagen ID.3. The first in the line of ID electric vehicles, the ID.3 is emblematic of the green revolution happening at Volkswagen. It is the start of a new era. While the German brand already offers electric vehicles such as the e-Golf, this is the first time VW is marketing a vehicle that is entirely designed to be electric. This strategic and marketing challenge is worth delaying the presentation of the new Golf, which will now only run on petrol.

VW won’t be the only brand at the Frankfurt motor show to unveil its electric transition. Porsche will officially present its Taycan, Seat will show off its Mii and Opel will introduce the electric version of its city car Corsa. And there will be others, such as the Honda e, the Japanese giant’s first 100% electric vehicle. Audi, Mercedes and Jaguar, which have already rolled out their electric models, will also be present. “Every manufacturer is going electric,” said Flavien Neuvy, head of L’Observatoire Cetelem for the auto market. “But not because they believe in the technology necessarily. They are being forced.”

Nevine Pollini, analyst at Union Bancaire Privée (UBP), agrees: “The car industry is currently experiencing a major turning point in its history. Go to a motor show and you’ll see: all the big names, such as Volkswagen with its ID and Audi’s e-tron, are offering complete lines of electric vehicles that will be on the market in late 2019 or throughout 2020. After years of denial, manufacturers finally understood that they no longer had a choice.” The reason? Environmental requirements from the European Union and draconian quotas for electric vehicles imposed by the Chinese government.

ASTRONOMICAL FINES

As the leading car market in the world with 28 million new vehicles sold in 2018, China implemented generous tax rebates several years ago for consumers buying a clean car. As a result, sales exploded, reaching 1.3 million cars in 2018, up 62% over one year. Thus far, the market is monopolised by local brands such as BYD (number two in the industry with 230,000 electric vehicles sold last year), SAIC, BAIC and Geely.

“China is ahead of the game in terms of clean cars,” said geo-energy economist Laurent Horvath, founder of 2000Watts.org. “In other words, Europe missed the first turn towards electric.” What’s more, the Chinese government is so sure of its advance and the maturity of the market that in March 2019 it decided to cut rebates for electric vehicles by 50%, before getting rid of them entirely in 2020. “With this regulatory shift, Beijing expects to kill off the lesser manufacturers,” explains Pollini. “The fewer incentives will lead to weaknesses among the most fragile players on the market, as well as a wave of concentration.” Indeed, the generous tax breaks created a pull factor where nearly 500 Chinese companies involved in various capacities in this emerging industry went all out in order to benefit from the government incentives.

But even with no tax breaks, western manufacturers will have no choice but to go electric in China. Since early 2019, Beijing requires that at least 10% of vehicles sold by all players operating in China be hybrid or electric, compared to 4% in 2018. This will go up to 12% starting in 2020. If the quota is not met, manufacturers must purchase credits from their Chinese competitors or pay fines. “China is the most dynamic market in the world. It sets the tone for the rest of the industry,” said Horvath. “Foreign groups simply cannot escape: they must sell zero-emission vehicles.”

“Every manufacturer is going electric, but not because they believe in the technology necessarily. They are being forced”

Flavien Neuvy, head of L’Observatoire Cetelem for the auto market

Renault, which arrived late to the Chinese market in 2016, decided to focus primarily on electric. Starting this autumn, the group will market its Renault City K-ZE, a low-cost 100% electric mini city car that is expected to rival Chinese competitors in terms of price. It’s an incredible challenge in an ultra-saturated market where, in addition to local players, western companies are all on the offensive. Ford, for example, launched its zero-emission Territory SUV in the second half of 2019 and expects to unveil 10 electric models in China over the next three years. BMW, Volkswagen and Daimler are also perfecting their plans of attack so as to not get left behind.

AN ENORMOUS CHALLENGE

“Establishing quotas on ‘clean’ vehicles, similar to what is being done in China, is something that Brussels had envisaged doing before caving in to the pressures of the car lobby,” said Bernard Jullien, founder of a consulting firm studying the car industry. Instead, the European union opted for CO2 emissions goals. Starting in 2021, manufacturers must indicate average CO2 emissions of less than 95 grams per kilometre for their fleet of new cars sold in Europe. In 2018, new vehicles emitted 120.5 grams. “It’s an enormous challenge,” according to the firm Euler Hermes in a study published in May. “It will force manufacturers to reduce their CO2 emissions by 20% between 2019 and 2020, whereas it took 10 years to reduce emissions by 25% previously.”

“If they fail to meet the goal, they could be faced with astronomical fines, as per the ‘polluter pays’ principle,” warned Nevine Pollini, analyst at UBP. “Each gram of excess CO2 will cost €95, multiplied by the number of cars sold in the EU.” According to figures from research group Jato, if nothing changes from 2018 to 2021, penalties could be as high as €3.24 billion for Fiat Chrysler, €3.6 billion for Renault and €9 billion for European leader Volkswagen. In total, fines could exceed €34 billion! As a result: “The main threat weighing on the car industry isn’t Brexit or any potential US customs duty, but rather EU regulations limiting CO2 emissions,” wrote Euler Hermes in its study published in May.

How did the car industry reach this tax impasse without predicting such a situation? “When the 95-gram limit was imposed on manufacturers in 2013, it didn’t seem like an impossible target given the incremental improvements in combustion engines,” said Nicolas Meilhan, scientific advisor and transport specialist for France Stratégie, a department reporting to the French Prime Minister. “And in fact, up until 2015, all the groups seemed off to a good start and set to reach the target by 2021.” And then dieselgate happened...which was a major step backwards.

In the 2000s, most manufacturers were counting on diesel to reduce their greenhouse gas emissions – since diesel emits an average of 20% less CO2 per kilometre than petrol. At the time, even Porsche – which typically steered clear of diesel – gave in, launching the Cayenne TDI in 2009. But everything changed in 2015, when the fraudulent engine scandal orchestrated by Volkswagen broke.

Many European cities announced they would limit the number of diesel cars

Following the scandal, many European cities such as Paris, Berlin, Madrid and Rome announced they would limit the number of diesel cars that generated the most pollution in the cities. As a result, the market for new diesel cars slumped. Correlated with the increased interest in SUVs, which shows no signs of stopping, the disavowal for diesel motors caused CO2 emissions to rise. Now, the 2021 target of 95 grams of CO2 seems difficult to attain. It could even be impossible for the companies that generate the most pollution. “It’s our goal, but we can’t guarantee we’ll be there in 2021,” said Dieter Zetsche in 2018. The former CEO of Daimler Mercedes resigned in May this year.

220 NEW MODELS

To tackle the challenge, manufacturers have admittedly limited options. “Some companies will have to retire models from their range that generate too much pollution,” said Pollini. “Others could simply leave Europe to escape the fines. This is the approach taken by US group General Motors, which sold its European brand Opel/ Vauxhall to Peugeot in 2017. But most have decided to commit to the electric revolution at top speed, before the 2021 deadline.

“By 2021, 220 new low-emission models (electric and hybrid) will be available in Europe, compared to 70 in 2018,” said Rémi Cornubert, senior partner specialising in mobility at the firm Advancy. “There’s no doubt about it, the stage is set for an inevitable electric boom.” Among the new models are the secondgeneration Renault Zoe, the Peugeot e-208, the DS3 Crossback e-Tense, the Volkswagen ID.3, the Porsche Taycan and the upcoming BMW iX3 and Volvo electric XC40. The Audi e-Tron and Mercedes EQC are already on the market. Even Toyota, which has only designed hybrids thus far, has drafted an aggressive plan. On 7 June, the Japanese manufacturer announced that it has moved up its target date from 2030 to 2025 to sell 50% electrified models around the world and unveiled a large range of battery-powered vehicles.

This forced march, both in Europe and China, is a real electric shock to major industry players, forcing them to overcome technical and economic challenges in a limited amount of time. “Manufacturers are up against what I call the ‘CO2 wall’,” said Flavien Neuvy. “They must invest giant sums of money to develop their fleet of electric vehicles, while the market share of these vehicles is still minimal (ed. note: approximately 2% of registrations in Europe in 2018).”

In November 2018, for example, Volkswagen announced it would invest nearly €44 billion in electric vehicles and new mobility services by 2023. Ford promised to put $11 billion on the table to launch 16 completely electric models and 24 hybrids by 2022. In total, the major manufacturers will invest $300 billion to develop electric vehicles over the next five to 10 years. Nearly half of these investments will go to China, according to figures from Reuters in January 2019. Volkswagen will assume one-third of this amount ($91 billion).

MERGERS ON THE HORIZON

For the car industry, these expenses are coming at the worst time. According to a study from firm Alix- Partners published in June, global production will only reach 90 million vehicles in 2019, compared to 93 million in 2018, representing a 3.2% drop. This slump will be followed by a period of sluggishness and production levels aren’t expected to exceed 2018 figures until 2022.

“For some companies, it will be difficult to reach those levels,” said Pollini. “Volkswagen is in good standing and can take on the necessary R&D expenses. But other companies will have to merge or create joint ventures in order to reduce development costs. For investors, this uncertainty results in some difficult choices. No one knows who will win and who will lose in the electric revolution.”

“For some companies, it will be difficult to reach those levels”

Nevine Pollini, analyst at UBP

For example, after years of underinvestment, Italian-American group Fiat Chrysler (FCA) is urgently seeking a partner to tackle the EU CO2 standards. The failed merger in June 2019 with Renault, Europe’s electric leader, was the start of a wave of alignments or at least an increased number of partnerships to share the burden of innovation.

In the meantime, companies are advancing based on what they can afford. PSA Group (Peugeot Citroën), whose investments in electric are below $1 billion, is continuing to adapt combustion engines. Announced with great fanfare, the e-208 is no more than a petrol-powered Peugeot 208 in which batteries and an electric engine replace the petrol turbine. “The electric revolution has taken PSA a bit by surprise,” said Bernard Jullien, a fine connoisseur of the industry.

In contrast, VW has grand ambitions. The Wolfsburg giant hopes to sell 22 million “clean” vehicles by 2028, with 70 completely electric models and 30 hybrid models, for its brands Volkswagen, Seat and Skoda. To do so, the German company inaugurated the MEB (Modularer Elektrobaukasten) electric modular platform in 2019 in its Dresden “glass factory”, also known as the “anti-Tesla factory”. This is where vehicles from the ID range will be made, such as the ID.3.

Volvo, owned by Chinese group Geely, even went one step further, announcing in July 2017 that it would no longer produce vehicles with only combustion engines as of 2019: all new cars will now be either hybrid or 100% electric. “This is the historic end of vehicles equipped with only a combustion engine,” confirmed Håkan Samuelsson, CEO of Volvo.

Now the hope is that car buyers will convert en masse to zero-emission vehicles. Thus far, rechargeable electric and hybrid vehicles only made up 2% of global sales, for a total of 2 million cars sold in 2018, according to Jato. The numbers don’t justify the massive investments. “This is the major issue that the entire car industry is concerned about,” said Neuvy. “Authorities are forcing manufacturers to produce electric vehicles, but for the time being, consumers don’t want go to electric. They prefer combustion engine SUVs. Will that change in the years to come? I have no idea.” During a round table organised in June 2019, BMW’s director of R&D Klaus Fröhlich made waves by saying: “There is no consumer demand for electric vehicles. None. European consumers aren’t ready to take the risk and go 100% electric because the infrastructure isn’t ready yet and resales are unknown.”

Electric and hybrid vehicles make up nearly 60% of new vehicle registrations in Norway, but that is because the government heavily penalises other forms of propulsion. Owners of an Audi Q7 are taxed €20,000, whereas buyers of electric vehicles can receive rebates. Everywhere else, there are fewer incentives, and the market share for “clean” vehicles is stuck below 5%.

“2020 will be the breakthrough year,” said Rémi Cornubert from consulting firm Advancy. “Either the increased offer will lead to real change in the market, or all manufacturers will need to go back to hybrids and push to reduce emissions of combustion engines. In my opinion, electric vehicles are a pipe dream. In 2020, there will be far too many models and not enough consumers.” Nevine Pollini of UBP has a different opinion: “Thus far, the adoption of electric vehicles has been faster than analysts have anticipated. Barriers to purchase, such as price, autonomy and lack of infrastructure, are starting to fall.”

FIAT CHRYSLER’S LITTLE TRICKS

With an average of 125 grams of CO2 emissions per new vehicle in 2018, Fiat Chrysler (FCA) is far from the European target, set at 95 grams by 2021. The Italian-American brand knows it won’t make the cut. But rather than resign itself to a gigantic fine, currently estimated at more than €3 billion, FCA found a loophole in the Brussels legislation. The group signed an agreement with Californian brand Tesla, which makes 100% electric vehicles, that will take care of FCA’s excess CO2. Mike Manley, CEO of Fiat, expects to pay approximately €1.8 billion over the next three years to Elon Musk’s company, so that FCA can include Tesla’s zero-emission vehicles in its CO2 averages. This will systematically lower FCA’s own average emissions. Credits from Tesla are expected to help FCA achieve its 15% reduction target for 2021. Truth be told, Fiat-Chrysler and Tesla aren’t the only companies doing this sort of business. Non-virtuous Mazda, whose fleet emitted more than 135 grams of CO2 per kilometre in 2018, announced it would partner with Toyota to also create a “pool”, as it is known in Brussels. Legal? Yes. But it goes against the spirit of the law.